Hong Kong, July 13, 2012 -- Moody's Investors Service says that its Asian Liquidity Stress Index (LSI)
was steady in June with 16.2% of its speculative-grade
portfolio demonstrating weak liquidity compared with 16.3%
in May.
In terms of specific numbers, the percentages translated into 16
of 99 issuers in June against also 16 of 98 issuers in May.
The Asian LSI has further stabilized at 15%-16% in
the last four months.
The index, which increases when speculative-grade liquidity
appears to decrease, remains near its highest level since October
2010. It also remains well below the high of 37% recorded
in the fourth quarter of 2008, during the financial crisis.
"Contributing to the moderate improvement in the index in June was
the addition of one new rating, Indonesian telecommunications tower
company PT Professional Telekomunikasi Indonesia, or Protelindo,
(Ba2 stable) which increased the denominator to 99 issuers,"
says Laura Acres, a Moody's Senior Vice President.
Acres was speaking on the release of Moody's latest report on the
index, entitled "Asian Liquidity Stress Index."
The liquidity sub-index for Chinese speculative-grade companies
fell back to 17% in June from its 19.1% May high.
The liquidity sub-index for Chinese property companies also fell,
to 19.2% in June from 23.1% in May,
but this was because one company moved out of the lowest speculative-grade
liquidity score category (SGL-4), resulting in an improvement
in both sub-indices. However, the property sub-index
remains high: almost one in five Chinese property companies currently
have weak liquidity.
For June, the net amount of high-yield debt rated by Moody's
in Asia remained steady at $40.5 billion. There has
been no new issuance since repeat issuer Lippo Karawaci Tbk (B1 positive),
an Indonesian property company, launched a $150 million seven-year
deal in May.
"Moody's expects the effective closure of the regional bond
markets in the second quarter will make conditions more challenging for
existing issuers looking to refinance, and for potential new issuers
planning to launch debut deals," says Acres.
"We expect issuance to remain low until the situation in the euro
area shows some signs of stability. If fallout from the euro area
sovereign crisis spreads this could exacerbate already tight lending conditions,"
says Acres.
Subscribers can access this report via this link: http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_143644.
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Laura Acres
Senior Vice President
Corporate Finance Group
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Moody's: Asian Liquidity Stress Index steady in June